Brazilian chicken farming is an undisputed power within the global meat industry, with major differences compared to major competitors, including:
● Production scale: Brazil is the second-largest producer of chicken meat worldwide, besides being the largest exporter. Brazil’s excellence in chicken meat production is remarkable, with improvements in genetics, refinement of management techniques, and high quality animal nutrition. All of this provides the necessary conditions for Brazil to produce and export large volumes of chicken meat;
● Understanding global demand: Brazil knows the requirements of global demand and its particularities like no other exporter, such as the preferences for cuts to be negotiated with several partners. We can also mention halal chicken exports, a segment in which the country is by far the top exporter, gaining loyalty from customers around the world who follow the precepts of Islam;
● Good relationship with commercial partners: Besides understanding global demand, Brazil also enjoys a good relationship with its peers. The strengthening of diplomatic ties with several countries around the world allows agreements to be reached that offer advantages to Brazil. China’s recent lifting of the anti-dumping tariff is a clear example of this type of situation;
● Competitive prices: Brazilian chicken meat, like other proteins, has very attractive prices, a result of the relatively low production meat costs, coupled with macro economic issues, such as currency fragility, which maintains excellent competitiveness of Brazilian agricultural commodities in the international market;
● Biosecurity: Issues involving biosecurity are a huge differentiator for the Brazilian market. While other chicken producers struggle to combat Avian Influenza, Brazil is faced with outbreaks of the disease that have not affected commercial chicken, remaining restricted to wild animals and background birds. In other words, without harm to Brazilian health status. Europe, the United States, Asia, and South Africa are still fighting against the problems caused by Avian Influenza, opening up an increasing space for Brazilian chicken products.
According to data from SAFRAS & Mercado, Brazil is expected to export around 5 mln tons this season, a slight decline compared to last year. Global exports will be 13.82 mln tons, that is, Brazil will account for more than a third of the global trade flow in 2024.
The differentiators listed here place Brazil as the best alternative for the global supply of chicken meat. Now the intrinsic issues faced by Brazilian competitors will be listed, as well as how they tend to lose market share over the course of the current year.
Starting with the United States, which, besides the difficulties inherent to Avian Influenza, has as a priority meeting its domestic demand. The year is quite difficult for US beef production, with the local herd in the worst position since the 1970s. Therefore, competing proteins will play a fundamental role in meeting the country’s robust demand for proteins of animal origin. According to USDA, the United States is expected to ship around 3.21 mln tons, below the 3.304 mln tons exported last year.
Furthermore, the United States is faced with a heavier cost structure to produce proteins of animal origin. The strengthening of the dollar in a year in which risk aversion gains the spotlight among funds and investors in general reduces the competitiveness of US commodities in the international market.
The scenario for the European Union presents additional challenges compared to the United States. Legislative issues, with increasingly strict animal welfare standards, are strangling European meat production. High production costs substantially reduce European competitiveness. Avian Influenza continues to be present in Europe, with great difficulty in containing the disease. Since the beginning of the outbreak, millions of birds have been sacrificed. Europe is expected to export around 1.66 mln tons in 2024, maintaining similar numbers to last year’s exports.
As a Brazilian competitor, it is important to mention two exporters that do not have such a tradition in the international market. In the case of Thailand and Ukraine, the great advantage that these players have is logistics, with good conditions to supply products to the Asian and European markets. In the case of Ukraine, despite the endless conflict with Russia, shipments will grow this season. Around 440 thousand tons of chicken meat should be shipped, with the possibility of exporting via road highways to Europe.
In the case of Thailand, supplying products to the Asian market is very easy, particularly China. The country should export around 1.12 mln tons, a slight increase compared to the 1.098 mln tons that were exported last year. Even with a privileged geography, Thais and Ukrainians fail to understand global demand, the scale of production, and prices.
The global picture is very clear, Brazil is consolidating itself as a great supply alternative for chicken meat. This scenario should become increasingly significant over the course of this decade. For the Brazilian meat-packing industry, exporting is an excellent business. The big point for the Brazilian market is that not all companies access the international market, which creates disparities in the formation of sectoral revenues.